PITTSBURGH--(BUSINESS WIRE)--EQT Corporation (NYSE: EQT) today announced 2015 net income attributable
to EQT of $85.2 million, or $0.56 per diluted share (EPS), compared to
earnings of $387.0 million, or $2.54 per diluted share in the previous
year. Adjusted net income during 2015 was $114.7 million, compared to
$523.9 million in 2014, after considering several items that affect
direct year-over-year comparability. Adjusted EPS for the year was
$0.75, compared to $3.43 in 2014; and adjusted operating cash flow
attributable to EQT was $964.3 million, compared to $1,424.0 million in
2014. The non-GAAP financial measures and the items affecting
comparability of results are detailed and reconciled in the Non-GAAP
Disclosures section of this news release.
Fourth quarter 2015 net loss attributable to EQT was $134.6 million,
compared to a net loss of $14.7 million in 2014. Fourth quarter adjusted
net loss was $8.8 million, compared to adjusted net income of $148.8
million in the fourth quarter of 2014; and adjusted EPS was negative
$0.06, down from $0.97. Adjusted operating cash flow attributable to EQT
was $233.9 million, versus $390.0 million in 2014.
Highlights for 2015:
-
Production sales volume was 27% higher
-
Midstream gathered volume was 28% higher
-
Transmission throughput was 18% higher
-
Cash balance at year-end was $1.25 billion (excluding EQM)
-
Access to an undrawn $1.5 billion unsecured revolver
RESULTS BY BUSINESS
EQT PRODUCTION
With its continued focus on the Marcellus shale, EQT Production achieved
record production sales volume of 603.1 Bcfe for 2015, representing a
27% increase over 2014. Approximately 84% of total production sales
volume was from horizontally drilled Marcellus wells.
EQT Production’s adjusted operating income, a non-GAAP financial
measure, totaled $74.2 million in 2015, compared to $688.5 million in
2014. Production’s adjusted net operating revenue (a non-GAAP financial
measure), which excludes the non-cash impact of derivatives, was $1.1
billion, or $489.2 million lower than the previous year. The
year-over-year decline was a result of the lower average realized price,
which more than offset the increased sales of produced natural gas.
Consistent with the significant growth in sales volume and increased
drilling activity, EQT Production’s 2015 operating expense, excluding
asset impairment charges and one-time drilling costs, was
$1,251.6 million, which was $198.9 million higher than the previous
year. Specifically, depreciation, depletion, and amortization expense
(DD&A) was $130.6 million higher; transportation and processing expenses
were $73.8 million higher; selling, general and administrative expense
(SG&A), excluding one-time drilling costs, was $4.3 million higher; and
lease operating expense (LOE), excluding production taxes, was $4.6
million higher; however, production taxes were $14.5 million lower for
the year as a result of lower prices. Exploration expense, excluding
asset impairment charges, was flat. Per unit LOE, including production
taxes, was 25% lower year-over-year, as volume increased more than
expenses.
Production sales volume totaled 154.5 Bcfe in the fourth quarter 2015,
13% higher than the fourth quarter 2014. Adjusted operating income for
the quarter was $0.3 million, compared to $154.7 million in 2014. EQT
Production adjusted net operating revenue for the quarter was $254.3
million, which was $139.3 million lower than the same period last year,
primarily due to a lower average realized sales price, which more than
offset the increase in sales volume. Operating expenses for the quarter,
excluding asset impairment charges and one-time drilling costs, were
$322.0 million, which was 9% higher than 2014.
The Company drilled (spud) 161 development wells during 2015, including
133 Marcellus wells, with an average length-of-pay of 5,400 feet; 24
Upper Devonian wells, with an average length-of-pay of 6,100 feet; and
two deep Utica wells, with an average length-of-pay of 5,800 feet.
Guidance
The Company reiterates its 2016 guidance for production sales volume of
700 – 720 Bcfe; and liquids volume of 10,000 – 10,500 MBBls. Production
sales volume for the first quarter 2016 is projected to be 175 – 180
Bcfe; and liquids volume is expected to be 2,450 – 2,500 MBBls. Average
differential to the NYMEX price is forecast at negative $0.40 – negative
$0.50 per Mcf for the full-year 2016; and positive $0.05 – positive
$0.10 per Mcf for the first quarter of 2016.
EQT MIDSTREAM
EQT Midstream’s 2015 operating income was $473.4 million, a 23% increase
over 2014, primarily as a result of increased gathering and transmission
revenues, partly offset by increased operating expenses. Net operating
revenue was $798.3 million, a 22% increase over 2014. Gathering revenue
was $504.5 million, and up 27% from 2014, as a result of higher gathered
volume. Transmission revenue increased by 18% to $267.7 million,
reflecting continued Marcellus Shale development.
Total operating expenses were $318.8 million, $41.2 million higher than
2014, excluding an impairment and the expiration of right-of-way
options. This increase was consistent with the growth of the EQT
Midstream business and reflects the costs of operating the expanded
gathering and transmission infrastructure. On a per-unit basis,
year-over-year gathering and compression expenses were 14% lower in 2015.
EQT Midstream’s fourth quarter 2015 operating income was $122.4 million,
$3.3 million higher than the fourth quarter of 2014. Gathering revenue
was $126.8 million, a $12.0 million increase on higher volume; and
transmission revenue totaled $71.9 million, a $4.9 million increase over
the same period last year. Operating expenses for the quarter totaled
$80.4 million, excluding impairment charges, which was $11.9 million
higher than the fourth quarter of 2014.
OTHER BUSINESS
2016 Capital Budget
EQT previously announced its 2016 capital expenditure (CAPEX) budget of
$1.0 billion, which includes $820 million for well development; and
excludes business development, land acquisitions, and EQT Midstream
capital associated with planned asset dropdowns in the first half of
2016, as well as capital investment at EQT Midstream Partners, LP. The
Company plans to drill 72 Marcellus wells – all of which will be on
multi-well pads to maximize operational efficiency and well economics.
The Company also plans to drill five deep Utica wells and, based on
results, may drill up to an additional five Utica wells.
2015 Capital Expenditures
EQT invested $2.0 billion in capital projects during 2015, excluding
$376.2 million of capital investments at EQT Midstream Partners. This
included $1.7 billion for EQT Production well development; $182.0
million for well and lease acreage acquisitions; and $110.6 million for
midstream projects owned by EQT.
2015 Reserves Report
In a separate news release today, EQT reported its 2015 reserves. Total
proved reserves at December 31, 2015, were 10.0 Tcfe, a 7% decrease from
2014; and proved developed reserves totaled 6.3 Tcfe, a 30% increase
over last year.
Realized Price
In 2015, the Company’s average realized price was $2.67 per Mcfe, which
was $1.49 lower than the $4.16 per Mcfe realized in 2014 – with $1.74
per Mcfe allocated to EQT Production and $0.93 per Mcfe allocated to EQT
Midstream.
In the fourth quarter, the Company’s average realized price was $2.59
per Mcfe, which was 32% lower than the $3.79 per Mcfe realized in 2014 –
with $1.65 per Mcfe allocated to EQT Production and $0.94 per Mcfe
allocated to EQT Midstream.
Asset Impairments and One-Time Drilling Costs
During 2015, the Company recognized $190.5 million in total charges
(detailed below) related to impairments and one-time drilling costs
related to rig reduction penalties (SG&A) and lease expirations
(Exploration) at EQT Production; and an impairment of a liquids
processing skid and the expiration of right-of-way options (SG&A) at EQT
Midstream. The Company recognized $146.8 million of these expenses in
the fourth quarter.
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Production Impairment
|
|
|
|
|
|
|
|
|
|
Ohio Utica
|
|
$
|
−
|
|
$
|
162,113
|
|
$
|
4,252
|
|
$
|
162,113
|
|
Permian
|
|
|
94,313
|
|
|
105,226
|
|
|
94,313
|
|
|
105,226
|
|
Non-Core Marcellus
|
|
|
19,703
|
|
|
−
|
|
|
19,703
|
|
|
−
|
|
Production SG&A
|
|
|
774
|
|
|
−
|
|
|
11,163
|
|
|
−
|
|
Production Exploration
|
|
|
27,833
|
|
|
5,911
|
|
|
54,971
|
|
|
14,640
|
|
Production Total
|
|
$
|
142,623
|
|
$
|
273,250
|
|
$
|
184,402
|
|
$
|
281,979
|
|
|
|
|
|
|
|
|
|
|
|
Midstream Impairment
|
|
$
|
4,201
|
|
$
|
−
|
|
|
4,201
|
|
$
|
−
|
|
Midstream SG&A
|
|
|
−
|
|
|
−
|
|
|
1,922
|
|
|
−
|
|
Midstream Total
|
|
$
|
4,201
|
|
$
|
−
|
|
$
|
6,123
|
|
$
|
−
|
|
Total
|
|
$
|
146,824
|
|
$
|
273,250
|
|
$
|
190,525
|
|
$
|
281,979
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Tax Valuation Allowance
During the fourth quarter of 2015, there was a negative tax adjustment
of $79.5 million to reserve certain state income tax loss carryforwards
that may not be utilized in a lower commodity prices environment. This
adjustment increased the effective tax rate for the 2015 fourth quarter
and full year.
EQT GP Holdings, LP (NYSE: EQGP)
In May 2015, EQT GP Holdings, LP, an EQT Corporation company, completed
its initial public offering. As of December 31, 2015, EQT Corporation
owns a 90.1% limited partner interest in EQGP, which holds EQT’s
partnership interests in EQT Midstream Partners.
EQT Midstream Partners, LP (NYSE: EQM) / EQT GP Holdings, LP
For the fourth quarter of 2015, EQT recorded earnings of $71.3 million,
or $0.46 per diluted share, attributable to the publicly held limited
partner interests in EQGP and EQM. The controlling interest portion of
adjusted EQT Midstream Partners EBITDA (a non-GAAP financial measure)
for the fourth quarter of 2015 was $35.4 million.
On January 21, 2016, EQM announced a cash distribution to its
unitholders of $0.71 per unit for the fourth quarter of 2015. EQGP also
announced a cash distribution to its unitholders of $0.122 per unit for
the fourth quarter of 2015.
The results for EQM and EQGP were released today and are available at www.eqtmidstreampartners.com.
Hedging
During the quarter, the Company added to its hedge position. The
Company's total natural gas production hedge position through 2018 is:
|
|
|
2016
|
|
2017
|
|
2018
|
|
NYMEX Swaps
|
|
|
|
|
|
|
|
Total Volume (Bcf)
|
|
|
280
|
|
|
156
|
|
|
71
|
|
Average Price per Mcf (NYMEX)
|
|
$
|
3.69
|
|
$
|
3.44
|
|
$
|
3.16
|
|
|
|
|
|
|
|
|
|
Fixed Price Physical Sales
|
|
|
|
|
|
|
|
Total Volume (Bcf)
|
|
|
44
|
|
|
9
|
|
|
−
|
|
Average Price per Mcf (NYMEX)
|
|
$
|
2.92
|
|
$
|
3.10
|
|
$
|
−
|
|
|
|
|
|
|
|
|
|
Collars
|
|
|
|
|
|
|
|
Total Volume (Bcf)
|
|
|
−
|
|
|
7
|
|
|
−
|
|
Average Floor Price per Mcf (NYMEX)
|
|
$
|
−
|
|
$
|
3.15
|
|
$
|
−
|
|
Average Cap Price per Mcf (NYMEX)
|
|
$
|
−
|
|
$
|
4.03
|
|
$
|
−
|
|
|
|
|
|
|
|
|
|
|
|
-
The average price is based on a conversion rate of 1.05 MMBtu/Mcf
-
For 2016 through 2018 the Company also has a natural gas sales
agreement for approximately 35 Bcf per year that includes a NYMEX
ceiling price of $4.88 per Mcf. The Company also sold calendar 2016,
2017, and 2018 calls for approximately 11, 29, and 12 Bcf at strike
prices of $3.65, $3.52, and $3.45 per Mcf, respectively
-
Fixed price physical sales impact is included in recoveries on the EQT
Corporation Price Reconciliation, and in the average differential
guidance
Operating Income
The Company reports operating income by segment in this news release.
Interest, income taxes and unallocated expense are controlled on a
consolidated, corporate-wide basis and are not allocated to the segments.
The following table reconciles operating (loss) income by segment, as
reported in this news release, to the consolidated operating income
reported in the Company’s financial statements:
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
(thousands)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Operating (loss) income:
|
|
|
|
|
|
|
|
|
|
EQT Production
|
|
$
|
(70,452
|
)
|
|
$
|
(55,980
|
)
|
|
$
|
104,865
|
|
|
$
|
505,950
|
|
|
EQT Midstream
|
|
|
122,436
|
|
|
|
119,113
|
|
|
|
473,378
|
|
|
|
384,309
|
|
|
Unallocated expense
|
|
|
(6,693
|
)
|
|
|
(22,803
|
)
|
|
|
(15,104
|
)
|
|
|
(36,864
|
)
|
|
Operating income
|
|
$
|
45,291
|
|
|
$
|
40,330
|
|
|
$
|
563,139
|
|
|
$
|
853,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated expense is primarily due to certain incentive compensation
and administrative costs that are not allocated to the operating
segments. Additionally, the Company made a $20 million contribution to
the EQT Foundation during the three months ended December 31, 2014,
which is included within unallocated expense in the table above.
Marcellus Horizontal Well Status (cumulative since inception)
|
|
|
As of
12/31/15
|
|
As of
9/30/15
|
|
As of
6/30/15
|
|
As of
3/31/15
|
|
As of
12/31/14
|
|
Wells spud
|
|
854
|
|
827
|
|
796
|
|
758
|
|
721
|
|
Wells online
|
|
693
|
|
642
|
|
604
|
|
560
|
|
533
|
|
Wells complete, not online
|
|
57
|
|
65
|
|
60
|
|
45
|
|
21
|
|
Frac stages (spud wells)*
|
|
23,566
|
|
22,535
|
|
21,296
|
|
20,225
|
|
18,958
|
|
Frac stages online
|
|
17,596
|
|
15,904
|
|
14,664
|
|
13,394
|
|
12,472
|
|
Frac stages complete, not online
|
|
1,858
|
|
2,069
|
|
1,972
|
|
1,347
|
|
592
|
|
*Includes planned stages for spud wells that have not yet been
hydraulically fractured.
|
|
|
NON-GAAP DISCLOSURES
Adjusted Net Income and Adjusted Earnings per Diluted Share
Adjusted net income and adjusted earnings per diluted share are non-GAAP
supplemental financial measures that are presented because they are
important measures used by management to evaluate period-to-period
comparisons of earnings trends. Adjusted net income and adjusted
earnings per diluted share should not be considered as alternatives to
net income or earnings per diluted share presented in accordance with
GAAP.
The table below reconciles adjusted net income and adjusted earnings per
diluted share with net income and earnings per diluted share as derived
from the statements of consolidated income to be included in EQT’s
report on Form 10-K for the year ended December 31, 2015.
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
(thousands, except per share information)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Net (loss) income attributable to EQT, as reported
|
|
$
|
(134,579
|
)
|
|
$
|
(14,704
|
)
|
|
$
|
85,171
|
|
|
$
|
386,965
|
|
|
Add back (deduct):
|
|
|
|
|
|
|
|
|
|
Asset impairments and one-time drilling costs
|
|
|
146,824
|
|
|
|
273,250
|
|
|
|
190,525
|
|
|
|
281,979
|
|
|
Charitable contribution
|
|
|
−
|
|
|
|
20,000
|
|
|
|
−
|
|
|
|
20,000
|
|
|
Hedging ineffectiveness gain
|
|
|
−
|
|
|
|
(11,699
|
)
|
|
|
−
|
|
|
|
(24,774
|
)
|
|
Gain on derivatives not designated as hedges
|
|
|
(176,648
|
)
|
|
|
(97,000
|
)
|
|
|
(385,762
|
)
|
|
|
(80,942
|
)
|
|
Net cash settlements received on derivatives not designated as hedges
|
|
|
101,219
|
|
|
|
43,471
|
|
|
|
172,093
|
|
|
|
34,239
|
|
|
Premiums received (paid) for derivatives that settled during the
period
|
|
|
2,690
|
|
|
|
−
|
|
|
|
(364
|
)
|
|
|
−
|
|
|
Non-cash loss (gain) on sale / asset exchange
|
|
|
−
|
|
|
|
3,603
|
|
|
|
−
|
|
|
|
(34,146
|
)
|
|
Tax impact*
|
|
|
(28,152
|
)
|
|
|
(68,515
|
)
|
|
|
8,933
|
|
|
|
(58,082
|
)
|
|
Subtotal
|
|
|
(88,646
|
)
|
|
|
148,406
|
|
|
|
70,596
|
|
|
|
525,239
|
|
|
Tax benefit related to regulatory asset
|
|
|
275
|
|
|
|
−
|
|
|
|
(35,438
|
)
|
|
|
−
|
|
|
Tax valuation allowance
|
|
|
79,531
|
|
|
|
−
|
|
|
|
79,531
|
|
|
|
−
|
|
|
Loss (income) from discontinued operations, net of tax
|
|
|
−
|
|
|
|
401
|
|
|
|
−
|
|
|
|
(1,371
|
)
|
|
Adjusted net (loss) income attributable to EQT
|
|
$
|
(8,840
|
)
|
|
$
|
148,807
|
|
|
$
|
114,689
|
|
|
$
|
523,868
|
|
|
Diluted weighted average common shares outstanding
|
|
|
153,421
|
|
|
|
152,633
|
|
|
|
152,939
|
|
|
|
152,513
|
|
|
Diluted EPS, as adjusted
|
|
$
|
(0.06
|
)
|
|
$
|
0.97
|
|
|
$
|
0.75
|
|
|
$
|
3.43
|
|
|
*The adjustments were tax effected at the Company’s marginal tax
rate for each period.
|
|
|
Operating Cash Flow and Adjusted Operating Cash Flow Attributable to
EQT
Operating cash flow and adjusted operating cash flow attributable to EQT
are non-GAAP supplemental financial measures that are presented as
indicators of an oil and gas exploration and production company’s
ability to internally fund exploration and development activities and to
service or incur additional debt. EQT includes this information because
management believes that changes in operating assets and liabilities
relate to the timing of cash receipts and disbursements and therefore
may not relate to the period in which the operating activities occurred.
Adjusted operating cash flow attributable to EQT excludes the
noncontrolling interest portion of adjusted EQT Midstream Partners
EBITDA (a non-GAAP supplemental financial measure reconciled below).
Management believes that removing the impact on operating cash flows of
the public unitholders of EQT GP Holdings, LP (EQGP) and EQT Midstream
Partners, LP (EQM) that is otherwise required to be consolidated in
EQT’s results provides useful information to an EQT investor. Operating
cash flow and adjusted operating cash flow attributable to EQT should
not be considered as alternatives to net cash provided by operating
activities presented in accordance with GAAP. The tables below reconcile
operating cash flow and adjusted operating cash flow attributable to EQT
with net cash provided by operating activities, as derived from the
statements of consolidated cash flows to be included in EQT’s report on
Form 10-K for the year ended December 31, 2015.
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
(thousands)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Net (loss) income
|
|
$
|
(63,262
|
)
|
|
$
|
29,497
|
|
|
$
|
321,886
|
|
|
$
|
510,990
|
|
|
Add back / (deduct):
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
219,425
|
|
|
|
194,390
|
|
|
|
819,216
|
|
|
|
679,298
|
|
|
Asset impairments and exploratory well costs, non-cash
|
|
|
147,238
|
|
|
|
273,250
|
|
|
|
182,242
|
|
|
|
281,979
|
|
|
Deferred income tax expense (benefit)
|
|
|
96,834
|
|
|
|
(70,280
|
)
|
|
|
17,876
|
|
|
|
32,021
|
|
|
Hedging ineffectiveness gain
|
|
|
−
|
|
|
|
(11,699
|
)
|
|
|
−
|
|
|
|
(24,774
|
)
|
|
Gain on derivatives not designated as hedges
|
|
|
(176,648
|
)
|
|
|
(97,000
|
)
|
|
|
(385,762
|
)
|
|
|
(80,942
|
)
|
|
Net cash settlements received on derivatives not designated as hedges
|
|
|
101,219
|
|
|
|
43,471
|
|
|
|
172,093
|
|
|
|
34,239
|
|
|
Non-cash incentive compensation
|
|
|
17,007
|
|
|
|
9,051
|
|
|
|
58,629
|
|
|
|
42,123
|
|
|
Non-cash loss (gain) on asset exchange and dispositions
|
|
|
−
|
|
|
|
4,303
|
|
|
|
−
|
|
|
|
(37,044
|
)
|
|
Other items, net
|
|
|
(3,318
|
)
|
|
|
(2,384
|
)
|
|
|
(11,856
|
)
|
|
|
(6,765
|
)
|
|
Operating cash flow:
|
|
$
|
338,495
|
|
|
$
|
372,599
|
|
|
$
|
1,174,324
|
|
|
$
|
1,431,125
|
|
|
|
|
|
|
|
|
|
|
|
|
(Deduct) / add back:
|
|
|
|
|
|
|
|
|
|
Changes in other assets and liabilities
|
|
|
(21,773
|
)
|
|
|
(99,802
|
)
|
|
|
42,616
|
|
|
|
(16,383
|
)
|
|
Net cash provided by operating activities
|
|
$
|
316,722
|
|
|
$
|
272,797
|
|
|
$
|
1,216,940
|
|
|
$
|
1,414,742
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
(thousands)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Operating cash flow (a non-GAAP measure reconciled above)
|
|
$
|
338,495
|
|
|
$
|
372,599
|
|
|
$
|
1,174,324
|
|
|
$
|
1,431,125
|
|
|
(Deduct) / add back:
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest portion of adjusted EQT Midstream Partners
EBITDA(1)
|
|
|
(93,243
|
)
|
|
|
(54,653
|
)
|
|
|
(312,065
|
)
|
|
|
(155,690
|
)
|
|
Charitable contribution
|
|
|
−
|
|
|
|
20,000
|
|
|
|
−
|
|
|
|
20,000
|
|
|
Exploration expense (cash)
|
|
|
1,985
|
|
|
|
3,328
|
|
|
|
6,999
|
|
|
|
7,076
|
|
|
Drilling program reduction charges, cash
|
|
|
(414
|
)
|
|
|
−
|
|
|
|
8,283
|
|
|
|
−
|
|
|
Current taxes on transactions(2)
|
|
|
−
|
|
|
|
48,695
|
|
|
|
150,425
|
|
|
|
121,483
|
|
|
Non-recurring tax benefits
|
|
|
(12,957
|
)
|
|
|
−
|
|
|
|
(63,626
|
)
|
|
|
−
|
|
|
Adjusted operating cash flow attributable to EQT
|
|
$
|
233,866
|
|
|
$
|
389,969
|
|
|
$
|
964,340
|
|
|
$
|
1,423,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Adjusted EQT Midstream Partners EBITDA and noncontrolling interest
portion of adjusted EQT Midstream Partners EBITDA are non-GAAP
supplemental financial measures reconciled below.
|
|
(2)
|
|
Amount represents current tax expense related to the sale of the
Northern West Virginia Marcellus Gathering System (NWV Gathering)
and the sale of EQGP units in its initial public offering.
|
|
|
|
|
EQT Production Adjusted Net Operating Revenues
The table below reconciles EQT Production adjusted net operating
revenues, a non-GAAP supplemental financial measure, to EQT Corporation
total operating revenues, as derived from the statements of consolidated
income to be included in EQT’s report on Form 10-K for the year ended
December 31, 2015.
EQT reports gain (loss) for hedging ineffectiveness and gain (loss) on
derivatives not designated as hedges within total operating revenues in
the statements of consolidated income.
EQT Production adjusted net operating revenues is presented because it
is an important measure used by EQT’s management to evaluate
period-over-period comparisons of earnings trends. EQT Production
adjusted net operating revenues should not be considered as an
alternative to EQT Corporation total operating revenues presented in
accordance with GAAP. EQT Production adjusted net operating revenues as
presented excludes the revenue impact of changes in the fair value of
derivative instruments prior to settlement and is net of transportation
and processing costs. Management utilizes EQT Production adjusted net
operating revenues to evaluate earnings trends because the measure
reflects only the impact of settled derivative contracts and thus does
not burden the revenue from natural gas sales with the often volatile
fluctuations in the fair value of derivatives prior to settlement. EQT
Production adjusted net operating revenues also reflects transportation
and processing costs as deductions from operating revenues because
management considers the net price realized for sales of products, after
the costs of processing and transporting the product to sales points, to
be an indicator of the quality of earnings period-over-period.
Management also considers this to be an indicator of how well EQT is
utilizing its transportation and processing contracts. The sale price
for natural gas is significantly impacted by the market in which the gas
is sold and the expense incurred to transport and process the gas is
important in evaluating the quality of earnings period-over-period
because the cost of reaching a higher priced market may exceed the
incremental price benefit of that market as compared to the market where
the gas is produced. This is particularly important to natural gas
producers in the Appalachian Basin given pipeline constraints and the
impact on pricing in the area. Management further believes that EQT
Production adjusted net operating revenues as presented provides useful
information for investors for evaluating period-over-period earnings and
is consistent with industry practices.
|
Calculation of EQT Production adjusted net operating revenues
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
$ in thousands (unless noted)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
EQT Production total operating revenues, as reported on segment page
|
|
$
|
394,150
|
|
|
$
|
515,699
|
|
|
$
|
1,540,889
|
|
|
$
|
1,813,292
|
|
|
(Deduct) / add back:
|
|
|
|
|
|
|
|
|
|
Hedging ineffectiveness gain
|
|
|
−
|
|
|
|
(11,699
|
)
|
|
|
−
|
|
|
|
(24,774
|
)
|
|
Gain on derivatives not designated as hedges
|
|
|
(175,174
|
)
|
|
|
(96,796
|
)
|
|
|
(385,055
|
)
|
|
|
(83,760
|
)
|
|
Net cash settlements received on derivatives not designated as hedges
|
|
|
100,600
|
|
|
|
42,348
|
|
|
|
170,314
|
|
|
|
36,453
|
|
|
Premiums received (paid) for derivatives that settled during the
period
|
|
|
2,690
|
|
|
|
−
|
|
|
|
(364
|
)
|
|
|
−
|
|
|
EQT Production transportation and processing, as reported on segment
page
|
|
|
(67,951
|
)
|
|
|
(55,940
|
)
|
|
|
(274,379
|
)
|
|
|
(200,562
|
)
|
|
EQT Production adjusted net operating revenues, a non-GAAP measure
|
|
$
|
254,315
|
|
|
$
|
393,612
|
|
|
$
|
1,051,405
|
|
|
$
|
1,540,649
|
|
|
|
|
|
|
|
|
|
|
|
|
Total sales volumes (MMcfe)
|
|
|
154,537
|
|
|
|
136,659
|
|
|
|
603,082
|
|
|
|
476,260
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price to EQT Production ($/Mcfe)
|
|
$
|
1.65
|
|
|
$
|
2.88
|
|
|
$
|
1.74
|
|
|
$
|
3.23
|
|
|
Add:
|
|
|
|
|
|
|
|
|
|
Gathering and Transmission to EQT Midstream ($/Mcfe)
|
|
$
|
0.94
|
|
|
$
|
0.91
|
|
|
$
|
0.93
|
|
|
$
|
0.93
|
|
|
Average realized price to EQT Corporation ($/Mcfe)
|
|
$
|
2.59
|
|
|
$
|
3.79
|
|
|
$
|
2.67
|
|
|
$
|
4.16
|
|
|
|
|
|
|
|
|
|
|
|
|
EQT Production total operating revenues, as reported on segment page
|
|
$
|
394,150
|
|
|
$
|
515,699
|
|
|
$
|
1,540,889
|
|
|
$
|
1,813,292
|
|
|
EQT Midstream total operating revenues, as reported on segment page
|
|
|
208,669
|
|
|
|
196,656
|
|
|
|
807,904
|
|
|
|
699,083
|
|
|
Less: intersegment revenues, net
|
|
|
(1,439
|
)
|
|
|
(9,161
|
)
|
|
|
(9,031
|
)
|
|
|
(42,665
|
)
|
|
EQT Corporation total operating revenues, as reported in accordance
with GAAP
|
|
$
|
601,380
|
|
|
$
|
703,194
|
|
|
$
|
2,339,762
|
|
|
$
|
2,469,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQT Production Adjusted Operating Income
The table below reconciles EQT Production adjusted operating income, a
non-GAAP supplemental financial measure, to EQT Corporation operating
income, as derived from the statements of consolidated income to be
included in EQT’s report on Form 10-K for the year ended December 31,
2015.
EQT reports gain for hedging ineffectiveness and gain on derivatives not
designated as hedges within operating income in the statements of
consolidated income.
EQT Production adjusted operating income is presented because it is an
important measure used by EQT’s management to evaluate
period-over-period comparisons of earnings trends. EQT Production
adjusted operating income should not be considered as an alternative to
EQT Corporation operating income presented in accordance with GAAP. EQT
Production adjusted operating income as presented excludes the revenue
impact of changes in the fair value of derivative instruments prior to
settlement, one-time impairment and drilling costs and non-cash gains
(losses) on sales / exchanges of assets. Management utilizes EQT
Production adjusted operating income to evaluate earnings trends because
the measure reflects only the impact of settled derivative contracts and
thus does not burden the income from natural gas sales with the often
volatile fluctuations in the fair value of derivatives prior to
settlement. The measure also excludes other one-time items that affect
the comparability of results. Management believes that EQT Production
adjusted operating income as presented provides useful information for
investors for evaluating period-over-period earnings.
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
(thousands)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
EQT Corporation operating income, as reported in accordance with GAAP
|
|
$
|
45,291
|
|
|
$
|
40,330
|
|
|
$
|
563,139
|
|
|
$
|
853,395
|
|
|
Add back / (deduct):
|
|
|
|
|
|
|
|
|
|
Unallocated expense
|
|
|
6,693
|
|
|
|
22,803
|
|
|
|
15,104
|
|
|
|
36,864
|
|
|
EQT Midstream operating income, as reported on segment page
|
|
|
(122,436
|
)
|
|
|
(119,113
|
)
|
|
|
(473,378
|
)
|
|
|
(384,309
|
)
|
|
EQT Production operating (loss) income, as reported on segment page
|
|
$
|
(70,452
|
)
|
|
$
|
(55,980
|
)
|
|
$
|
104,865
|
|
|
$
|
505,950
|
|
|
Add back / (deduct):
|
|
|
|
|
|
|
|
|
|
Hedging ineffectiveness gain
|
|
|
−
|
|
|
|
(11,699
|
)
|
|
|
−
|
|
|
|
(24,774
|
)
|
|
Gain on derivatives not designated as hedges
|
|
|
(175,174
|
)
|
|
|
(96,796
|
)
|
|
|
(385,055
|
)
|
|
|
(83,760
|
)
|
|
Net cash settlements received on derivatives not designated as hedges
|
|
|
100,600
|
|
|
|
42,348
|
|
|
|
170,314
|
|
|
|
36,453
|
|
|
Premiums received (paid) for derivatives that settled during the
period
|
|
|
2,690
|
|
|
|
−
|
|
|
|
(364
|
)
|
|
|
−
|
|
|
Asset impairments and one-time drilling costs
|
|
|
142,623
|
|
|
|
273,250
|
|
|
|
184,402
|
|
|
|
281,979
|
|
|
Non-cash loss (gain) on sale/exchange
|
|
|
−
|
|
|
|
3,603
|
|
|
|
−
|
|
|
|
(27,383
|
)
|
|
EQT Production adjusted operating income
|
|
$
|
287
|
|
|
$
|
154,726
|
|
|
$
|
74,162
|
|
|
$
|
688,465
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EQT Midstream Partners EBITDA, Noncontrolling Interest
Portion of Adjusted EQT Midstream Partners EBITDA and Controlling
Interest Portion of Adjusted EQT Midstream Partners EBITDA
As used in this news release, adjusted EQT Midstream Partners EBITDA
means EQM’s net income plus EQM’s interest expense, depreciation and
amortization expense, income tax expense (if applicable), and non-cash
long-term compensation expense less EQM’s non-cash adjustments
(if applicable), equity income, other income, capital lease payments,
and adjusted EBITDA attributable to the Jupiter Gathering System
(Jupiter) and Northern West Virginia Marcellus Gathering System (NWV
Gathering) prior to acquisition. As used in this news release,
noncontrolling interest portion and controlling interest portion of
adjusted EQT Midstream Partners EBITDA mean the portions of adjusted EQT
Midstream Partners EBITDA attributable to the noncontrolling interest
unitholders of EQM and EQGP (noncontrolling interest portion), and EQT,
as the ultimate parent company of EQM (controlling interest portion).
Adjusted EQT Midstream Partners EBITDA, noncontrolling interest portion
of adjusted EQT Midstream Partners EBITDA and controlling interest
portion of adjusted EQT Midstream Partners EBITDA are non-GAAP
supplemental financial measures that management and external users of
the Company's consolidated financial statements, such as industry
analysts, investors, lenders and rating agencies, use to assess the
effects of the noncontrolling interests in relation to:
-
the Company's operating performance as compared to other companies in
its industry;
-
the ability of the Company's assets to generate sufficient cash flow
to make distributions to its investors;
-
the Company's ability to incur and service debt and fund capital
expenditures; and
-
the viability of acquisitions and other capital expenditure projects
and the returns on investment of various investment opportunities.
The Company believes that adjusted EQT Midstream Partners EBITDA and
noncontrolling and controlling interest portion of adjusted EQT
Midstream Partners EBITDA provide useful information to investors in
assessing the Company's financial condition and results of operations.
Adjusted EQT Midstream Partners EBITDA and noncontrolling and
controlling interest portion of adjusted EQT Midstream Partners EBITDA
should not be considered as alternatives to EQM’s net income, operating
income, or any other measure of financial performance or liquidity
presented in accordance with GAAP. Adjusted EQT Midstream Partners
EBITDA and noncontrolling and controlling interest portion of adjusted
EQT Midstream Partners EBITDA have important limitations as analytical
tools because they exclude some, but not all, items that affect EQM's
net income. Additionally, because adjusted EQT Midstream Partners EBITDA
and noncontrolling and controlling interest portion of adjusted EQT
Midstream Partners EBITDA may be defined differently by other companies
in the Company's or EQM's industries, the definition of adjusted EQT
Midstream Partners EBITDA and noncontrolling and controlling interest
portion of adjusted EQT Midstream Partners EBITDA may not be comparable
to similarly titled measures of other companies, thereby diminishing
their utility. The table below reconciles adjusted EQT Midstream
Partners EBITDA and noncontrolling and controlling interest portion of
adjusted EQT Midstream Partners EBITDA to EQM’s net income, as derived
from the statements of consolidated operations to be included in EQM’s
report on Form 10-K for the year ended December 31, 2015.
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
(thousands, unless noted)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Net Income, EQT Midstream Partners
|
|
$
|
112,709
|
|
|
$
|
84,833
|
|
|
$
|
393,450
|
|
|
$
|
266,500
|
|
|
Add:
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
11,300
|
|
|
|
9,912
|
|
|
|
45,661
|
|
|
|
30,856
|
|
|
Depreciation and amortization expense
|
|
|
14,238
|
|
|
|
13,076
|
|
|
|
51,640
|
|
|
|
46,054
|
|
|
Income tax expense
|
|
|
−
|
|
|
|
5,799
|
|
|
|
6,703
|
|
|
|
31,705
|
|
|
Non-cash long-term compensation expense
|
|
|
334
|
|
|
|
784
|
|
|
|
1,467
|
|
|
|
3,368
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Non-cash adjustments
|
|
|
−
|
|
|
|
(1,520
|
)
|
|
|
−
|
|
|
|
(1,520
|
)
|
|
Equity income
|
|
|
(1,220
|
)
|
|
|
−
|
|
|
|
(2,367
|
)
|
|
|
−
|
|
|
Other income
|
|
|
(2,040
|
)
|
|
|
(715
|
)
|
|
|
(5,639
|
)
|
|
|
(2,349
|
)
|
|
Capital lease payments for Allegheny Valley Connector
|
|
|
(6,710
|
)
|
|
|
(7,042
|
)
|
|
|
(22,059
|
)
|
|
|
(21,802
|
)
|
|
Adjusted EBITDA attributable to Jupiter prior to acquisition (a)
|
|
|
−
|
|
|
|
−
|
|
|
|
−
|
|
|
|
(34,733
|
)
|
|
Adjusted EBITDA attributable to NWV Gathering prior to acquisition
(b)
|
|
|
−
|
|
|
|
(19,195
|
)
|
|
|
(19,841
|
)
|
|
|
(62,431
|
)
|
|
Adjusted EQT Midstream Partners EBITDA
|
|
$
|
128,611
|
|
|
$
|
85,932
|
|
|
$
|
449,015
|
|
|
$
|
255,648
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest ownership percentage (c)
|
|
|
72.5
|
%
|
|
|
63.6
|
%
|
|
|
69.5
|
%
|
|
|
60.9
|
%
|
|
Noncontrolling interest portion of Adjusted EQT Midstream Partners
EBITDA
|
|
$
|
93,243
|
|
|
$
|
54,653
|
|
|
$
|
312,065
|
|
|
$
|
155,690
|
|
|
Controlling interest portion of Adjusted EQT Midstream Partners
EBITDA
|
|
$
|
35,368
|
|
|
$
|
31,279
|
|
|
$
|
136,950
|
|
|
$
|
99,958
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Adjusted EBITDA attributable to Jupiter prior to acquisition for the
year ended December 31, 2014 was calculated as net income of $20.1
million plus depreciation and amortization expense of $2.1 million,
plus income tax expense of $12.5 million.
|
|
(b)
|
|
Adjusted EBITDA attributable to NWV Gathering prior to acquisition
for the year ended December 31, 2015 was calculated as net income of
$11.1 million, plus depreciation and amortization expense of $2.0
million, plus income tax expense of $6.7 million. Adjusted EBITDA
attributable to NWV Gathering prior to acquisition for the three and
twelve months ended December 31, 2014 were calculated as net income
of $10.1 million and $33.7 million, respectively, plus depreciation
and amortization expense of $3.3 million and $9.5 million,
respectively, plus income tax expense of $5.8 million and $19.2
million, respectively.
|
|
(c)
|
|
Represents weighted average noncontrolling interest ownership
percentage for the period, which considers the impact of the 9.9%
noncontrolling interest in EQGP.
|
|
|
|
|
Fourth Quarter and Year-End 2015 Webcast
Information
The Company's conference call with securities analysts begins at 10:30
a.m. ET today and will be broadcast live via the Company's web site at www.eqt.com,
and on the investor information page of the Company’s web site at ir.eqt.com,
with a replay available for seven days following the call.
EQT Midstream Partners, LP (NYSE: EQM) and EQT GP Holdings, LP (NYSE:
EQGP), for which EQT Corporation is the parent company, will also host a
joint conference call with security analysts today, beginning at 11:30
a.m. ET. The call will be broadcast live via www.eqtmidstreampartners.com,
with a replay available for seven days following the call.
About EQT Corporation:
EQT Corporation is an integrated energy company with emphasis on
Appalachian area natural gas production, gathering, and transmission.
With more than 125 years of experience, EQT continues to be a leader in
the use of advanced horizontal drilling technology – designed to
minimize the potential impact of drilling-related activities and reduce
the overall environmental footprint. Through safe and responsible
operations, the Company is committed to meeting the country’s growing
demand for clean-burning energy, while continuing to provide a rewarding
workplace and enrich the communities where its employees live and work.
EQT also owns a 90% limited partner interest in EQT GP Holdings, LP. EQT
GP Holdings, LP owns the general partner interest, all of the incentive
distribution rights, and a portion of the limited partner interests in
EQT Midstream Partners, LP.
Visit EQT Corporation at www.EQT.com.
EQT Management speaks to investors from time-to-time and the analyst
presentation for these discussions, which is updated periodically, is
available via the Company’s investor relations website at http://ir.eqt.com.
Cautionary Statements
The United States Securities and Exchange Commission (SEC) permits oil
and gas companies, in their filings with the SEC, to disclose only
proved, probable and possible reserves that a company anticipates as of
a given date to be economically and legally producible and deliverable
by application of development projects to known accumulations. We use
certain terms, such as “EUR” (estimated ultimate recovery) and “3P”
(proved, probable and possible), that the SEC’s guidelines prohibit us
from including in filings with the SEC. These measures are by their
nature more speculative than estimates of reserves prepared in
accordance with SEC definitions and guidelines and accordingly are less
certain.
Total sales volume per day (or daily production) is an operational
estimate of the daily production or sales volume on a typical day
(excluding curtailments).
EBITDA is defined as earnings before interest, taxes, depreciation, and
amortization and is not a financial measure calculated in accordance
with GAAP. EBITDA is a non-GAAP supplemental financial measure that the
Company’s management and external users of the Company’s financial
statements, such as industry analysts, investors, lenders and rating
agencies, may use to assess: (i) the Company’s performance versus prior
periods; (ii) the Company’s operating performance as compared to other
companies in its industry; (iii) the ability of the Company’s assets to
generate sufficient cash flow to make distributions to its investors;
(iv) the Company’s ability to incur and service debt and fund capital
expenditures; and (v) the viability of acquisitions and other capital
expenditure projects and the returns on investment of various investment
opportunities.
The Company is unable to provide a reconciliation of projected EBITDA to
projected operating income, the most comparable financial measure
calculated in accordance with GAAP, due to the unknown effect, timing
and potential significance of certain income statement items.
Similarly, the Company is unable to provide a reconciliation of its
projected operating cash flow to projected net cash provided by
operating activities, the most comparable financial measure calculated
in accordance with GAAP, because of uncertainties associated with
projecting future net income and changes in assets and liabilities.
Disclosures in this news release contain certain forward-looking
statements within the meaning of Section 21E of the Securities Exchange
Act of 1934, as amended, and Section 27A of the Securities Act of 1933,
as amended. Statements that do not relate strictly to historical or
current facts are forward-looking. Without limiting the generality of
the foregoing, forward-looking statements contained in this news release
specifically include the expectations of plans, strategies, objectives
and growth and anticipated financial and operational performance of the
Company and its subsidiaries, including guidance regarding the Company’s
strategy to develop its Marcellus, deep Utica, and other reserves;
drilling plans and programs (including the number, type, feet of pay and
location of wells to be drilled); projected natural gas prices, basis,
recoveries and average differential; total resource potential, reserves,
EUR, expected decline curve and reserve replacement ratio; projected
Company and third party production sales volume and growth rates
(including liquids sales volume and growth rates); projected finding and
development costs, operating costs, unit costs, well costs and midstream
revenue deductions; projected gathering and transmission volume and
growth rates; the Company’s access to, and timing of, capacity on
pipelines; infrastructure programs (including the timing, cost and
capacity of the transmission and gathering expansion projects); the
timing, cost, capacity and expected interconnects with facilities and
pipelines of the Ohio Valley Connector and Mountain Valley Pipeline
(MVP) projects; the ultimate terms, partners and structure of the MVP
joint venture; technology (including drilling and completion
techniques); projected EQT Midstream and EQT Midstream Partners, LP
(EQM) EBITDA; acquisitions, monetization transactions, including asset
sales (dropdowns) to EQM and other asset sales, joint ventures or other
transactions involving the Company’s assets; the projected cash flows
resulting from the Company’s limited partner interests in EQT GP
Holdings, LP (EQGP); internal rate of return (IRR) and returns per well;
projected capital expenditures; potential future impairments of the
Company’s assets; the amount and timing of any repurchases under the
Company’s share repurchase authorization; liquidity and financing
requirements, including funding sources and availability; changes in the
Company’s or EQM’s credit ratings; projected operating revenues, cash
flows and cash-on-hand; hedging strategy; the effects of government
regulation and litigation; the dividend and distribution amounts and
rates; tax position and projected effective tax rate. These
forward-looking statements involve risks and uncertainties that could
cause actual results to differ materially from projected results.
Accordingly, investors should not place undue reliance on
forward-looking statements as a prediction of actual results. The
Company has based these forward-looking statements on current
expectations and assumptions about future events. While the Company
considers these expectations and assumptions to be reasonable, they are
inherently subject to significant business, economic, competitive,
regulatory and other risks and uncertainties, many of which are
difficult to predict and beyond the Company’s control. The risks and
uncertainties that may affect the operations, performance and results of
the Company’s business and forward-looking statements include, but are
not limited to, those set forth under Item 1A, “Risk Factors,” of the
Company’s Form 10-K for the year ended December 31, 2014, as filed with
the SEC and in the Company's Form 10-K for the year ended December 31,
2015 to be filed with the SEC, as updated by any subsequent Form 10-Qs.
Any forward-looking statement speaks only as of the date on which such
statement is made and the Company does not intend to correct or update
any forward-looking statement, whether as a result of new information,
future events or otherwise.
Information in this news release regarding EQGP and its subsidiaries,
including EQM, is derived from publicly available information published
by the partnerships.
|
EQT CORPORATION AND SUBSIDIARIES
Statements
of Consolidated Income (Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
(Thousands, except per share amounts)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Sales of natural gas, oil and NGLs
|
|
$
|
364,253
|
|
|
$
|
535,515
|
|
|
$
|
1,690,360
|
|
$
|
2,132,409
|
|
Pipeline and marketing services
|
|
|
60,479
|
|
|
|
70,679
|
|
|
|
263,640
|
|
|
256,359
|
|
Gain on derivatives not designated as hedges
|
|
|
176,648
|
|
|
|
97,000
|
|
|
|
385,762
|
|
|
80,942
|
|
Total operating revenues
|
|
|
601,380
|
|
|
|
703,194
|
|
|
|
2,339,762
|
|
|
2,469,710
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Transportation and processing
|
|
|
68,219
|
|
|
|
56,184
|
|
|
|
275,348
|
|
|
202,203
|
|
Operation and maintenance
|
|
|
31,337
|
|
|
|
27,531
|
|
|
|
124,030
|
|
|
108,283
|
|
Production
|
|
|
28,312
|
|
|
|
35,826
|
|
|
|
123,665
|
|
|
133,488
|
|
Exploration
|
|
|
29,817
|
|
|
|
9,239
|
|
|
|
61,970
|
|
|
21,716
|
|
Selling, general and administrative
|
|
|
60,762
|
|
|
|
68,752
|
|
|
|
249,925
|
|
|
238,134
|
|
Depreciation, depletion and amortization
|
|
|
219,425
|
|
|
|
194,390
|
|
|
|
819,216
|
|
|
679,298
|
|
Impairment of long-lived assets
|
|
|
118,217
|
|
|
|
267,339
|
|
|
|
122,469
|
|
|
267,339
|
|
Total operating expenses
|
|
|
556,089
|
|
|
|
659,261
|
|
|
|
1,776,623
|
|
|
1,650,461
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) gain on sale / exchange of assets
|
|
|
—
|
|
|
|
(3,603
|
)
|
|
|
—
|
|
|
34,146
|
|
Operating income
|
|
|
45,291
|
|
|
|
40,330
|
|
|
|
563,139
|
|
|
853,395
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
3,664
|
|
|
|
719
|
|
|
|
9,953
|
|
|
6,853
|
|
Interest expense
|
|
|
35,935
|
|
|
|
36,979
|
|
|
|
146,531
|
|
|
136,537
|
|
Income before income taxes
|
|
|
13,020
|
|
|
|
4,070
|
|
|
|
426,561
|
|
|
723,711
|
|
Income tax expense
|
|
|
76,282
|
|
|
|
(25,828
|
)
|
|
|
104,675
|
|
|
214,092
|
|
(Loss) income from continuing operations
|
|
|
(63,262
|
)
|
|
|
29,898
|
|
|
|
321,886
|
|
|
509,619
|
|
(Loss) income from discontinued operations, net of tax
|
|
|
—
|
|
|
|
(401
|
)
|
|
|
—
|
|
|
1,371
|
|
Net (loss) income
|
|
|
(63,262
|
)
|
|
|
29,497
|
|
|
|
321,886
|
|
|
510,990
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
71,317
|
|
|
|
44,201
|
|
|
|
236,715
|
|
|
124,025
|
|
Net (loss) income attributable to EQT Corporation
|
|
$
|
(134,579
|
)
|
|
$
|
(14,704
|
)
|
|
$
|
85,171
|
|
$
|
386,965
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to EQT Corporation:
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations
|
|
$
|
(134,579
|
)
|
|
$
|
(14,303
|
)
|
|
$
|
85,171
|
|
$
|
385,594
|
|
(Loss) income from discontinued operations, net of tax
|
|
|
—
|
|
|
|
(401
|
)
|
|
|
—
|
|
|
1,371
|
|
Net (loss) income
|
|
$
|
(134,579
|
)
|
|
$
|
(14,704
|
)
|
|
$
|
85,171
|
|
$
|
386,965
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share of common stock attributable to EQT Corporation:
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
Weighted average common stock outstanding
|
|
|
152,633
|
|
|
|
151,605
|
|
|
|
152,398
|
|
|
151,553
|
|
(Loss) income from continuing operations
|
|
$
|
(0.88
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
0.56
|
|
$
|
2.54
|
|
Income from discontinued operations, net of tax
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
0.01
|
|
Net (loss) income
|
|
$
|
(0.88
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
0.56
|
|
$
|
2.55
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
Weighted average common stock outstanding
|
|
|
153,421
|
|
|
|
152,633
|
|
|
|
152,939
|
|
|
152,513
|
|
(Loss) income from continuing operations
|
|
$
|
(0.88
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
0.56
|
|
$
|
2.53
|
|
Income from discontinued operations, net of tax
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
0.01
|
|
Net (loss) income
|
|
$
|
(0.88
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
0.56
|
|
$
|
2.54
|
|
Dividends declared per common share
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
$
|
0.12
|
|
$
|
0.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQT CORPORATION
PRICE RECONCILIATION
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
in thousands (unless noted)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
LIQUIDS
|
|
|
|
|
|
|
|
|
|
NGLs:
|
|
|
|
|
|
|
|
|
|
Sales volume (MMcfe) (a)
|
|
|
11,978
|
|
|
|
12,819
|
|
|
|
51,530
|
|
|
|
40,587
|
|
|
Sales volume (Mbbls)
|
|
|
1,996
|
|
|
|
2,135
|
|
|
|
8,588
|
|
|
|
6,764
|
|
|
Gross price ($/Bbl)
|
|
$
|
21.23
|
|
|
$
|
32.16
|
|
|
$
|
18.84
|
|
|
$
|
41.94
|
|
|
Gross NGL sales
|
|
$
|
42,372
|
|
|
$
|
68,712
|
|
|
$
|
161,775
|
|
|
$
|
283,728
|
|
|
Third-party processing
|
|
|
(23,825
|
)
|
|
|
(18,857
|
)
|
|
|
(100,329
|
)
|
|
|
(64,313
|
)
|
|
Net NGL sales
|
|
$
|
18,547
|
|
|
$
|
49,855
|
|
|
$
|
61,446
|
|
|
$
|
219,415
|
|
|
Oil:
|
|
|
|
|
|
|
|
|
|
Sales volume (MMcfe) (a)
|
|
|
1,208
|
|
|
|
1,061
|
|
|
|
4,458
|
|
|
|
2,693
|
|
|
Sales volume (Mbbls)
|
|
|
201
|
|
|
|
177
|
|
|
|
743
|
|
|
|
449
|
|
|
Net price ($/Bbl)
|
|
$
|
32.45
|
|
|
$
|
64.74
|
|
|
$
|
38.70
|
|
|
$
|
78.51
|
|
|
Net oil sales
|
|
$
|
6,531
|
|
|
$
|
11,447
|
|
|
$
|
28,752
|
|
|
$
|
35,232
|
|
|
|
|
|
|
|
|
|
|
|
|
Net liquids sales
|
|
$
|
25,078
|
|
|
$
|
61,302
|
|
|
$
|
90,198
|
|
|
$
|
254,647
|
|
|
|
|
|
|
|
|
|
|
|
|
NATURAL GAS
|
|
|
|
|
|
|
|
|
|
Sales volume (MMcf)
|
|
|
141,351
|
|
|
|
122,779
|
|
|
|
547,094
|
|
|
|
432,980
|
|
|
NYMEX price ($/MMBtu) (b)
|
|
$
|
2.27
|
|
|
$
|
4.01
|
|
|
$
|
2.66
|
|
|
$
|
4.38
|
|
|
Btu uplift
|
|
$
|
0.20
|
|
|
$
|
0.39
|
|
|
$
|
0.25
|
|
|
$
|
0.38
|
|
|
Gross natural gas price ($/Mcf)
|
|
$
|
2.47
|
|
|
$
|
4.40
|
|
|
$
|
2.91
|
|
|
$
|
4.76
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis ($/Mcf)
|
|
$
|
(0.96
|
)
|
|
$
|
(1.50
|
)
|
|
$
|
(1.18
|
)
|
|
$
|
(1.07
|
)
|
|
Recoveries ($/Mcf) (c)
|
|
|
0.62
|
|
|
|
0.88
|
|
|
|
0.81
|
|
|
|
0.82
|
|
|
Cash settled basis swaps (not designated as hedges) ($/Mcf)
|
|
|
0.18
|
|
|
|
0.30
|
|
|
|
0.03
|
|
|
|
0.06
|
|
|
Average differential ($/Mcf)
|
|
$
|
(0.16
|
)
|
|
$
|
(0.32
|
)
|
|
$
|
(0.34
|
)
|
|
$
|
(0.19
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Average adjusted price ($/Mcf)
|
|
$
|
2.31
|
|
|
$
|
4.08
|
|
|
$
|
2.57
|
|
|
$
|
4.57
|
|
|
Cash settled derivatives (cash flow hedges) ($/Mcf)
|
|
|
0.36
|
|
|
|
0.10
|
|
|
|
0.47
|
|
|
|
(0.06
|
)
|
|
Cash settled derivatives (not designated as hedges) ($/Mcf)
|
|
|
0.55
|
|
|
|
0.04
|
|
|
|
0.28
|
|
|
|
0.02
|
|
|
Average adjusted price, including cash settled derivatives ($/Mcf)
|
|
$
|
3.22
|
|
|
$
|
4.22
|
|
|
$
|
3.32
|
|
|
$
|
4.53
|
|
|
|
|
|
|
|
|
|
|
|
|
Net natural gas sales, including cash settled derivatives
|
|
$
|
455,252
|
|
|
$
|
518,446
|
|
|
$
|
1,810,897
|
|
|
$
|
1,962,667
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL PRODUCTION
|
|
|
|
|
|
|
|
|
|
Total net natural gas & liquids sales, including cash settled
derivatives
|
|
$
|
480,330
|
|
|
$
|
579,748
|
|
|
$
|
1,901,095
|
|
|
$
|
2,217,314
|
|
|
Total sales volume (MMcfe)
|
|
|
154,537
|
|
|
|
136,659
|
|
|
|
603,082
|
|
|
|
476,260
|
|
|
|
|
|
|
|
|
|
|
|
|
Net natural gas & liquids price, including cash settled derivatives
($/Mcfe)
|
|
$
|
3.11
|
|
|
$
|
4.24
|
|
|
$
|
3.15
|
|
|
$
|
4.66
|
|
|
|
|
|
|
|
|
|
|
|
|
Midstream Deductions ($/Mcfe)
|
|
|
|
|
|
|
|
|
|
Gathering to EQT Midstream
|
|
$
|
(0.74
|
)
|
|
$
|
(0.71
|
)
|
|
$
|
(0.74
|
)
|
|
$
|
(0.73
|
)
|
|
Transmission to EQT Midstream
|
|
|
(0.20
|
)
|
|
|
(0.20
|
)
|
|
|
(0.19
|
)
|
|
|
(0.20
|
)
|
|
Third-party gathering and transmission costs
|
|
|
(0.52
|
)
|
|
|
(0.45
|
)
|
|
|
(0.48
|
)
|
|
|
(0.50
|
)
|
|
Total midstream deductions
|
|
$
|
(1.46
|
)
|
|
$
|
(1.36
|
)
|
|
$
|
(1.41
|
)
|
|
$
|
(1.43
|
)
|
|
Average realized price to EQT Production ($/Mcfe)
|
|
$
|
1.65
|
|
|
$
|
2.88
|
|
|
$
|
1.74
|
|
|
$
|
3.23
|
|
|
Gathering and transmission to EQT Midstream ($/Mcfe)
|
|
$
|
0.94
|
|
|
$
|
0.91
|
|
|
$
|
0.93
|
|
|
$
|
0.93
|
|
|
Average realized price to EQT Corporation ($/Mcfe)
|
|
$
|
2.59
|
|
|
$
|
3.79
|
|
|
$
|
2.67
|
|
|
$
|
4.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
NGLs and crude oil were converted to Mcfe at the rate of six Mcfe
per barrel for all periods.
|
|
(b)
|
|
The Company’s volume weighted NYMEX natural gas price (actual
average NYMEX natural gas price ($/MMBtu) was $2.27 and $4.00 for
the three months ended December 31, 2015 and 2014, respectively, and
$2.66 and $4.41 for the years ended December 31, 2015 and 2014,
respectively).
|
|
(c)
|
|
Recoveries represent differences in natural gas prices between the
Appalachian Basin and the sales points of other markets reached by
utilizing transportation capacity, differences in natural gas prices
between Appalachian Basin and fixed price sales contracts, term
sales with fixed differentials to NYMEX and other marketing
activity, including the sale of unused pipeline capacity. Recoveries
include approximately $0.22 and $0.21 per Mcf for the three months
ended December 31, 2015 and 2014, respectively, and $0.21 and $0.19
per Mcf for the years ended December 31, 2015 and 2014,
respectively, for the sale of unused pipeline capacity.
|
|
|
|
|
|
EQT PRODUCTION
RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales volume detail (MMcfe):
|
|
|
|
|
|
|
|
|
|
Marcellus (a)
|
|
131,580
|
|
|
|
111,360
|
|
|
|
505,102
|
|
|
378,195
|
|
Other (b)
|
|
22,957
|
|
|
|
25,299
|
|
|
|
97,980
|
|
|
98,065
|
|
Total production sales volumes (c)
|
|
154,537
|
|
|
|
136,659
|
|
|
|
603,082
|
|
|
476,260
|
|
|
|
|
|
|
|
|
|
|
|
Average daily sales volumes (MMcfe/d)
|
|
1,680
|
|
|
|
1,485
|
|
|
|
1,652
|
|
|
1,305
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price to EQT Production ($/Mcfe)
|
|
$ 1.65
|
|
|
$
|
2.88
|
|
|
$
|
1.74
|
|
$
|
3.23
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating expenses (LOE), excluding production taxes ($/Mcfe)
|
|
$ 0.11
|
|
|
$
|
0.13
|
|
|
$
|
0.12
|
|
$
|
0.14
|
|
Production taxes ($/Mcfe)
|
|
$ 0.07
|
|
|
$
|
0.13
|
|
|
$
|
0.09
|
|
$
|
0.14
|
|
Production depletion ($/Mcfe)
|
|
$ 1.24
|
|
|
$
|
1.24
|
|
|
$
|
1.18
|
|
$
|
1.22
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization (DD&A) (thousands):
|
|
|
|
|
|
|
|
|
|
Production depletion
|
|
$ 191,910
|
|
|
$
|
168,830
|
|
|
$
|
713,651
|
|
$
|
582,624
|
|
Other DD&A
|
|
2,467
|
|
|
|
2,504
|
|
|
|
9,797
|
|
|
10,231
|
|
Total DD&A
|
|
$ 194,377
|
|
|
$
|
171,334
|
|
|
$
|
723,448
|
|
$
|
592,855
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures (thousands)
|
|
$ 398,453
|
|
|
$
|
585,968
|
|
|
$
|
1,852,100
|
|
$
|
2,441,486
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL DATA (thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Production sales
|
|
$ 218,976
|
|
|
$
|
407,204
|
|
|
$
|
1,155,834
|
|
$
|
1,704,758
|
|
Gain for hedging ineffectiveness
|
|
—
|
|
|
|
11,699
|
|
|
|
—
|
|
|
24,774
|
|
Gain on derivatives not designated as hedges
|
|
175,174
|
|
|
|
96,796
|
|
|
|
385,055
|
|
|
83,760
|
|
Total operating revenues
|
|
394,150
|
|
|
|
515,699
|
|
|
|
1,540,889
|
|
|
1,813,292
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Transportation and processing
|
|
67,951
|
|
|
|
55,940
|
|
|
|
274,379
|
|
|
200,562
|
|
LOE, excluding production taxes
|
|
16,941
|
|
|
|
18,391
|
|
|
|
70,556
|
|
|
65,917
|
|
Production taxes
|
|
11,370
|
|
|
|
17,435
|
|
|
|
53,109
|
|
|
67,571
|
|
Exploration expense
|
|
29,842
|
|
|
|
9,221
|
|
|
|
61,970
|
|
|
21,665
|
|
Selling, general and administrative (SG&A)
|
|
30,105
|
|
|
|
28,416
|
|
|
|
134,294
|
|
|
118,816
|
|
DD&A
|
|
194,377
|
|
|
|
171,334
|
|
|
|
723,448
|
|
|
592,855
|
|
Impairment of long-lived assets
|
|
114,016
|
|
|
|
267,339
|
|
|
|
118,268
|
|
|
267,339
|
|
Total operating expenses
|
|
464,602
|
|
|
|
568,076
|
|
|
|
1,436,024
|
|
|
1,334,725
|
|
(Loss) gain on sale / exchange of assets
|
|
—
|
|
|
|
(3,603
|
)
|
|
|
—
|
|
|
27,383
|
|
Operating (loss) income
|
|
$ (70,452
|
)
|
|
$
|
(55,980
|
)
|
|
$
|
104,865
|
|
$
|
505,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Includes Upper Devonian wells.
|
|
(b)
|
|
Includes 2,442 MMcfe of Dry Utica sales volume for the three months
ended December 31, 2015 and 4,173 MMcfe for the year ended December
31, 2015.
|
|
(c)
|
|
NGLs and crude oil were converted to Mcfe at the rate of six Mcfe
per barrel for all periods.
|
|
|
|
|
|
EQT MIDSTREAM
RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
Net operating revenues (thousands):
|
|
|
|
|
|
|
|
|
|
Gathering
|
|
|
|
|
|
|
|
|
|
Firm reservation fee revenues
|
|
$
|
77,889
|
|
$
|
17,659
|
|
$
|
272,758
|
|
$
|
42,604
|
|
Volumetric based fee revenues:
|
|
|
|
|
|
|
|
|
|
Usage fees under firm contracts (a)
|
|
|
7,848
|
|
|
17,162
|
|
|
33,415
|
|
|
44,654
|
|
Usage fees under interruptible contracts
|
|
|
41,088
|
|
|
80,040
|
|
|
198,365
|
|
|
310,620
|
|
Total volumetric based fee revenues
|
|
|
48,936
|
|
|
97,202
|
|
|
231,780
|
|
|
355,274
|
|
Total gathering revenues
|
|
$
|
126,825
|
|
$
|
114,861
|
|
$
|
504,538
|
|
$
|
397,878
|
|
|
|
|
|
|
|
|
|
|
|
Transmission
|
|
|
|
|
|
|
|
|
|
Firm reservation fee revenues
|
|
$
|
58,558
|
|
$
|
56,829
|
|
$
|
221,160
|
|
$
|
176,890
|
|
Volumetric based fee revenues:
|
|
|
|
|
|
|
|
|
|
Usage fees under firm contracts (a)
|
|
|
12,329
|
|
|
8,019
|
|
|
42,035
|
|
|
41,528
|
|
Usage fees under interruptible contracts
|
|
|
1,059
|
|
|
2,226
|
|
|
4,481
|
|
|
8,080
|
|
Total volumetric based fee revenues
|
|
|
13,388
|
|
|
10,245
|
|
|
46,516
|
|
|
49,608
|
|
Total transmission revenues
|
|
$
|
71,946
|
|
$
|
67,074
|
|
$
|
267,676
|
|
$
|
226,498
|
|
|
|
|
|
|
|
|
|
|
|
Storage, marketing and other net revenues
|
|
|
8,257
|
|
|
5,643
|
|
|
26,049
|
|
|
30,728
|
|
Total net operating revenues
|
|
$
|
207,028
|
|
$
|
187,578
|
|
$
|
798,263
|
|
$
|
655,104
|
|
|
|
|
|
|
|
|
|
|
|
Gathered volumes (BBtu per day):
|
|
|
|
|
|
|
|
|
|
Firm reservation
|
|
|
1,337
|
|
|
300
|
|
|
1,149
|
|
|
172
|
|
Volumetric based services (b)
|
|
|
772
|
|
|
1,585
|
|
|
918
|
|
|
1,445
|
|
Total gathered volumes
|
|
|
2,109
|
|
|
1,885
|
|
|
2,067
|
|
|
1,617
|
|
|
|
|
|
|
|
|
|
|
|
Gathering and compression expense ($/MMBtu)
|
|
$
|
0.11
|
|
$
|
0.12
|
|
$
|
0.12
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
|
|
Transmission pipeline throughput (BBtu per day):
|
|
|
|
|
|
|
|
|
|
Firm capacity reservation
|
|
|
1,730
|
|
|
1,829
|
|
|
1,841
|
|
|
1,405
|
|
Volumetric based services (b)
|
|
|
387
|
|
|
244
|
|
|
281
|
|
|
389
|
|
Total transmission pipeline throughput
|
|
|
2,117
|
|
|
2,073
|
|
|
2,122
|
|
|
1,794
|
|
|
|
|
|
|
|
|
|
|
|
Average contracted firm transmission reservation commitments (BBtu
per day)
|
|
|
2,795
|
|
|
2,684
|
|
|
2,624
|
|
|
2,056
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures (thousands)
|
|
$
|
118,790
|
|
$
|
121,546
|
|
$
|
486,809
|
|
$
|
455,359
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL DATA (thousands)
|
|
|
|
|
|
|
|
|
|
Total operating revenues
|
|
$
|
208,669
|
|
$
|
196,656
|
|
$
|
807,904
|
|
$
|
699,083
|
|
Purchased gas costs
|
|
|
1,641
|
|
|
9,078
|
|
|
9,641
|
|
|
43,979
|
|
Total net operating revenues
|
|
|
207,028
|
|
|
187,578
|
|
|
798,263
|
|
|
655,104
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Operation and maintenance (O&M)
|
|
|
31,631
|
|
|
27,917
|
|
|
124,030
|
|
|
108,359
|
|
SG&A
|
|
|
23,897
|
|
|
17,362
|
|
|
101,374
|
|
|
82,165
|
|
DD&A
|
|
|
24,863
|
|
|
23,186
|
|
|
95,280
|
|
|
87,034
|
|
Impairment of long-lived assets
|
|
|
4,201
|
|
|
—
|
|
|
4,201
|
|
|
—
|
|
Total operating expenses
|
|
|
84,592
|
|
|
68,465
|
|
|
324,885
|
|
|
277,558
|
|
Gain on sale / exchange of assets
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,763
|
|
Operating income
|
|
$
|
122,436
|
|
$
|
119,113
|
|
$
|
473,378
|
|
$
|
384,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Includes commodity charges and fees on volumes gathered or
transported in excess of firm contracted capacity.
|
|
(b)
|
|
Includes volumes gathered or transported under interruptible
contracts and volumes in excess of firm contracted capacity.
|
|
|
|
|
